Dayton to Wisconsin: You owe us $58 million - now

Governor wants state to pay balance owed in tax reciprocity dispute

This isn't over a Vikings-Packers bet gone wrong, though Minnesota might gladly take a starting quarterback as partial payment for the $58 million it says it's owed. Rather, it's over the end of a disputed tax program that has spilled from one administration into the next.

Frustrated by inaction by the Badger State, Democratic Gov. Mark Dayton is drafting a letter demanding the state hand over tax collections Minnesota says are owed from people who live in Wisconsin but work across the border here. An old deal allowed taxpayers to file in whatever state they live in with the states settling up later, but former Republican Gov. Tim Pawlenty canceled it in 2009, arguing that Minnesota was getting shortchanged.

The $58 million represents the final payment from Wisconsin under the old deal and was due Dec. 1, Minnesota officials say.

"Our new administration ... is dedicated to working in good faith with our Minnesota partners, and that includes reviewing how to best meet previous payment agreements. We look forward to working with Minnesota to fix the broken agreement so taxpayers from both states can more easily file future tax returns.

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The willingness to revive the agreement will be seen as good news by some, particularly east metro lawmakers whose constituents must file two tax returns. But Chandler offered no timeline for figuring out when or even whether to make the payment.

Borgman said acting Minnesota Revenue Commissioner Dan Salomone received word recently that Wisconsin couldn't pay until July 1, the start of the state's fiscal year. Minnesota asked Wisconsin to put it in writing, which hasn't happened, leading to the expected letter from Dayton.

Furthermore, Borgman said Minnesota is owed more than $4,500 in daily interest, which could cost Wisconsin an additional $1 million if it doesn't pay until the new fiscal year.

Both states face cash-flow issues, likely ratcheting up tensions over the matter. Minnesota's most recent revenue projections are slightly better than expected, but would be even better if Wisconsin cut a check.

Wisconsin officials declined further comment.

In the last session of the Minnesota Legislature, lawmakers scrapped a proposal for a study on reinstating a tax reciprocity agreement. As many as 80,000 border-crossing taxpayers must file two tax returns this year.

Jason Hoppin can be reached at 651-228-5445.

ONLINE

Taxpayers working in one state and living in the other can find more details about how their state income filings will change next year at taxes.state.mn.us /taxes/other_supporting_content/wi_reciprocity.shtml or revenue.wi.gov/ faqs/ise/mnrecipro.html.